By Shawn Langlois, MarketWatch
LONDON (MarketWatch) -- British stocks on Tuesday extended the
prior session's sharp drop, amid new concerns over what a Greece
exit from the euro zone could mean for the markets.
The FTSE 100 ended 0.5% lower at 5,437.62.
The index shed 2% Monday after last-ditch attempts to form a
coalition government in Greece stumbled over the weekend.
That sparked another batch of fears that the country won't be
able to push through with austerity reforms it promised in exchange
for a bailout agreed in March.
"This latest Hellenic national anti-incumbent swing," according
to Barclays Capital analyst Edmund Shing, "has returned euro land
to a state of political flux over continued efforts to reduce
burgeoning public debt burdens, and has revived the existential
question of the euro's continued existence, at least in its present
form."
On Tuesday, a statement from Greek President Karolos Papoulias
said that talks had failed to reach consensus. A new election is
now expected to be called for mid-June.
Leading advancers in the FTSE, shares of security firm G4S PLC
rose 3.2%, while Carnival PLC (CUK) bucked the trend by adding more
than 3.4%.
International Consolidated Airlines Group lost 6% after J.P.
Morgan cut its rating on IAG to neutral from overweight, saying
that the recent rally in the share price has made its peers, like
top pick Lufthansa, more attractive.
Experian PLC also took a hit, losing 2.9%.
On the banking front, which is particularly susceptible to
tensions in the euro zone, Barclays PLC (BCS)shares failed to find
their footing, dropping 2% on top of the prior session's notable
retreat.
Elsewhere, Rebekah Brooks, the former boss of News Corp.'s
British newspaper unit News International, will be charged with
conspiring to obstruct justice, prosecutors said Tuesday.
Her husband, Charles Brooks, along with her former assistant,
her chauffeur and two security men also face charges, according to
The Wall Street Journal. News Corp. (NWSA) owns The Wall Street
Journal and MarketWatch, the publisher of this report.
Of U.K. newspaper rivals, Trinity Mirror climbed 6.3%, while
Daily Mail & General Trust was up 0.5%.